The Australian Securities and Investments Commission (ASIC) plans to release a report mid-year on home insurance selling after the NSW bushfires highlighted concerns about consumers having sufficient cover to rebuild homes.

“We anticipate the findings will assist in identifying steps that might be taken to enhance consumers’ understanding of policy coverage, to help them protect what is likely to be their most valuable asset, especially in the event of a wide-scale natural disaster,” ASIC Deputy Chairman Peter Kell told the Insurance Council of Australia regulatory seminar in Sydney on Friday.

ASIC has sought information from the industry on the sale and distribution of home insurance and has also commissioned external consumer research.

Issues include point-of-sale information, use of insurance calculators, affordability, advertising and the relative importance of price compared to other features.

Home insurance concerns emerged following the Queensland floods and were again in the spotlight after the NSW bushfires left some policyholders with insufficient funds to rebuild homes, despite claims being paid in full.

“We continue to face challenges with underinsurance,” Mr Kell said.

ASIC is also cracking down on the sale of add-on insurance, including products sold with cars and consumer credit insurance.

UK scandals related to payment protection insurance and credit card add-ons have highlighted potential risks and the regulator will take “enforcement action” if necessary, Mr Kell says. 

“We are closely examining the experience of the UK, the US and other jurisdictions so that we learn the lessons to help ensure that we don’t end up with mis-selling of this scale in Australia,” he told the seminar.

ASIC plans to release a report in the first half of this year on claims-handling procedures for consumer credit insurance and is completing a scoping study on add-on insurance sold by car dealers. 

Mr Kell says the regulator is also focusing on travel insurance attached to credit cards as part of its regular reviews of various product disclosure statements.

“There is a risk that consumers may not pay much attention to the cover until they make a claim, at which time it may be too late to deal with limitations or exclusions,” he said.